US stocks close nearly flat after a wild week

29 Aug 2015 | Author: | No comments yet »

Global Stock Markets Surge, Ending Days of Huge Losses.

In a volatile trading session in New York, the Standard & Poor’s 500, Dow Jones industrial average and NASDAQ composite index each gained well over 2 percent. The market then rebounded sharply over the next two days as investors decided the sell-off was overdone. “People are taking a little bit of a pause,” said Paul Springmeyer, senior portfolio manager at the Private Client Reserve at U.S.

Bank. “We’re finally winding down here where maybe we’re seeing more rational behavior.” Despite recovering their losses from earlier in the week, stocks are still on course for their worst monthly performance in more than three years. The gains, all recorded in the last 45 minutes of trading, helped investors recover some of the 23 percent in losses sustained over the previous five days. That apparently was an effort to stabilize the market ahead of the September 3 military parade celebrating the 70th anniversary of the World War II victory over Japan.

The recent market turmoil has thrown into doubt expectations for a rate increase next month, with most economists now saying it’s off the table for now. Over a longer period, the Chinese market had tumbled 42 percent since its mid-June peak, erasing more than $5 trillion in value as traders worried that the stock values were too high, with prices unjustified by China’s slowing economy.

Federal Reserve Vice Chairman Stanley Fischer said Friday that before the recent turbulence in financial markets, there was a “pretty strong case” for starting to hike rates in September. And Alan Valdes at DME Securities blamed the market volatility on lower volumes typical of the summer months, coupled with uncertainty and eroding confidence about Beijing’s monetary policies.

Beijing unexpectedly allowed the yuan to weaken earlier this month, raising concerns Beijing was worried about its exporters, who have helped drive its massive economic growth. On Thursday, China’s central bank set its central rate for the yuan at a four-year low, at 6.4085 against the U.S. dollar, or about .07 percent weaker than the previous day.

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